Sweepstakes groups align in search of support

An alliance of sweepstakes entrepreneurs are trying to win support by touting their virtues.

Michael Barrett / Halifax Media Group

Sweepstakes business owners have historically been content to operate in the shadows.

Fears about a negative public perception have fueled that behavior, as have strategic efforts to fly under the radar of competitors.

But the industry’s recent legal hurdles in North Carolina have triggered a survival instinct. An alliance of sweepstakes entrepreneurs are trying to win support by touting their virtues.

With unemployment high and the economy still struggling, they argue the state can’t afford to ignore the number of people they employ, and the revenue they produce in taxes and license fees.

“I think we probably should have done something like this a long time ago,” said Jim Harris, chairman of the Coalition for Electronic Sweepstakes. “We’re trying to educate the public, the legislators and everybody, so they’ll see the good we bring, and understand that we’re not casinos.”

Playing up the positive

Harris has operated sweepstakes businesses in and around Fayetteville about five years. He and other members of the coalition have launched a website, www.keepitlegalnc.com, “to educate the public on the economic benefits of electronic sweepstakes.”

The move comes after the state Supreme Court crippled the industry with a December ruling, in which it upheld a 2010 state sweepstakes ban. Affected businesses are appealing.

The website cites data from a study by economist and former N.C. State University professor J.C. Poindexter. He determined that prior to the December court ruling, there were more than 1,000 electronic sweepstakes cafes across the state that directly employed 10,000 people. The average pay was 40 percent higher than the minimum wage, and in some cases double the minimum wage, Harris said.

At a time when state government is looking for new revenue sources, regulating and taxing electronic sweepstakes could provide the state with hundreds of millions of dollars that could fund education and other critical programs, Harris said.

“This is going to have a drastic effect across North Carolina if these businesses remain closed,” said Harris. “People don’t realize how far-reaching it is.”

Stepping into the light

The sweepstakes industry’s “loud and proud” stance marks a departure from old trends.

James Mecham works with SweepsCoach, a California consulting agency that develops and supplies sweepstakes software and helps entrepreneurs start sweepstakes businesses.

In October, before the high court upheld the ban, he said North Carolina – and specifically the Charlotte market – likely had the heaviest concentration of the sweepstakes establishments in the nation.

But you wouldn’t have known it by looking at the phone book or doing an Internet search for the businesses, he promised.

Mecham said owners of the machines were weary of becoming too public.

That was because of public perception that they were gambling parlors and because no sweepstakes business owner wanted the competition scoping out their setups, according to the consultant.

In 2012, a business hoping to put together local directories of gaming locations contacted Mecham. His response: “You won’t be able to do that.”

Sweepstakes businesses didn’t want to be that public, he said at the time.

And there’s no trade group, either regionally or nationally, to speak for the industry.

“It’s going to be a long time before it’s completely legitimized,” he said.

Harris hopes that doesn’t turn out to be the case. He still believes sweepstakes businesses should maintain a low profile in many ways – just not in every way.